Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems; Quality Reporting Programs; Overall Hospital Quality Star Rating; Hospital Price Transparency; and Notice of Closure of a Teaching Hospital and Opportunity To Apply for Available Slots

We refer readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74492 through 74493) for a detailed discussion of the statutory background regarding payment reductions for ASCs that fail to meet the ASCQR Program requirements. 2. Policy Regarding Reduction to the ASC Payment Rates for ASCs That Fail To Meet the ASCQR Program Requirements for a Payment Determination Year

The national unadjusted payment rates for many services paid under the ASC payment system are equal to the product of the ASC conversion factor and the scaled relative payment weight for the APC to which the service is assigned. For CY 2026, the ASC conversion factor is equal to the conversion factor calculated for the previous year updated by the productivity-adjusted hospital market basket update factor. The productivity adjustment is set forth in section 1833(i)(2)(D)(v) of the Act. The productivity-adjusted hospital market basket update was the annual update for the ASC payment system for a 5-year period (CY 2019 through CY 2023), which was extended an additional 2 years (through CY 2025) in the CY 2024 OPPS/ASC final rule with comment period (88 FR 81960). As discussed in section XIII. of this final rule with comment period, we are finalizing our proposal to continue using the productivity-adjusted hospital market basket update as the update factor for the ASC payment system for CY 2026. Under the ASCQR Program, in accordance with section 1833(i)(7)(A) of the Act and as discussed in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68499), any annual increase in certain payment rates under the ASC payment system shall be reduced by 2.0 percentage points for ASCs that fail to meet the reporting requirements of the ASCQR Program. This reduction applied beginning with the CY 2014 payment rates (77 FR 68500). For a complete discussion of the calculation of the ASC conversion factor and our finalized proposal to update the ASC payment rates using the inpatient hospital market basket update for CYs 2019 through 2023, we refer readers to the CY 2019 OPPS/ASC final rule with comment period (83 FR 59073 through 59080).

In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68499 through 68500), in order to implement the requirement to reduce the annual update for ASCs that fail to meet the ASCQR Program requirements, we finalized the following policies: (1) to calculate a full update conversion factor and an ASCQR Program reduced update conversion factor; (2) to calculate reduced national unadjusted payment rates using the ASCQR Program reduced update conversion factor that would apply to ASCs that fail to meet their quality reporting requirements for that calendar year payment determination; and (3) that application of the 2.0 percentage point reduction to the annual update may result in the update to the ASC payment system being less than zero prior to the application of the productivity adjustment. The ASC conversion factor is used to calculate the ASC payment rate for services with the following payment indicators (listed in Addenda AA and BB to this final rule with comment period, which are available via the internet on the CMS website): “A2,” “D2,” “G2,” “P2,” “R2”, and “Z2,” as well as the service portion of device-intensive procedures identified by “J8” (77 FR 68500). We finalized our proposal that payment for all services assigned the payment indicators listed would be subject to the reduction of the national unadjusted payment rates for applicable ASCs using the ASCQR Program reduced update conversion factor (77 FR 68500).

The conversion factor is not used to calculate the ASC payment rates for separately payable services that are assigned status indicators other than payment indicators “A2”, “D2”, “G2,” “J8”, “P2”, “R2”, and “Z2.” These services include separately payable drugs and biologicals, pass-through devices that are contractor-priced, brachytherapy sources that are paid based on the OPPS payment rates, and certain office-based procedures, radiology services, and diagnostic tests where payment is based on the PFS nonfacility PE RVU-based amount, and a few other specific services that receive cost-based payment (77 FR 68500). As a result, we also finalized our proposal that the ASC payment rates for these

services would not be reduced for failure to meet the ASCQR Program requirements because the payment rates for these services are not calculated using the ASC conversion factor and, therefore, are not affected by reductions to the annual update (77 FR 68500).

Office-based surgical procedures (generally those performed more than 50 percent of the time in physicians' offices) and separately paid radiology services (excluding covered ancillary radiology services involving certain nuclear medicine procedures or involving the use of contrast agents) are paid at the lesser of the PFS nonfacility PE RVU- based amounts or the amount calculated under the standard ASC ratesetting methodology. Similarly, in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66933 through 66934), we finalized our proposal that payment for certain diagnostic test codes within the medical range of CPT codes for which separate payment is allowed under the OPPS will be at the lower of the PFS nonfacility PE RVU-based (or technical component) amount or the rate calculated according to the standard ASC ratesetting methodology when provided integral to covered ASC surgical procedures. In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68500), we finalized our proposal that the standard ASC ratesetting methodology for this type of comparison would use the ASC conversion factor that has been calculated using the full ASC update adjusted for productivity. This is necessary so that the resulting ASC payment indicator, based on the comparison, assigned to these procedures or services is consistent for each HCPCS code, regardless of whether payment is based on the full update conversion factor or the reduced update conversion factor.

For ASCs that receive the reduced ASC payment for failure to meet the ASCQR Program requirements, we have noted our belief that it is both equitable and appropriate that a reduction in the payment for a service should result in proportionately reduced coinsurance liability for beneficiaries (77 FR 68500). Therefore, in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68500), we finalized our proposal that the Medicare beneficiary's national unadjusted coinsurance for a service to which a reduced national unadjusted payment rate applies will be based on the reduced national unadjusted payment rate.

In the CY 2013 OPPS/ASC final rule with comment period, we finalized our proposal that all other applicable adjustments to the ASC national unadjusted payment rates would apply in those cases when the annual update is reduced for ASCs that fail to meet the requirements of the ASCQR Program (77 FR 68500). For example, the following standard adjustments would apply to the reduced national unadjusted payment rates: the wage index adjustment; the multiple procedure adjustment; the interrupted procedure adjustment; and the adjustment for devices furnished with full or partial credit or without cost (77 FR 68500). We believe that these adjustments continue to be equally applicable to payment for ASCs that do not meet the ASCQR Program requirements (77 FR 68500).

In the CY 2015 through CY 2025 OPPS/ASC final rules with comment period, we did not make any other changes to these policies. We proposed to continue applying these policies for the CY 2026 reporting period/CY 2028 payment determination and for subsequent years.

We did not receive public comments on these policies, and therefore, we are finalizing as proposed the continuation of these policies for the CY 2026 reporting period/CY 2028 payment determination and for subsequent years.

In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94514 through 94521), we summarized broad public input received on a Request for Information (RFI) discussing potential methodologic modifications to the Safety of Care measure group within the Overall Hospital Quality Star Rating that is published on the provider comparison tool on Medicare.gov (https://www.medicare.gov/care-compare/). The potential modifications discussed in that RFI aimed to emphasize the contribution of the Safety of Care measure group to the Overall Hospital Quality Star Rating. In that RFI, we also noted our intention to potentially issue additional RFIs or undertake rulemaking on this topic in the future.

Patient safety constitutes a fundamental component of the CMS National Quality Strategy, representing a sustained commitment to fostering optimal health outcomes and ensuring the safest possible care for all patients.\433\ As we noted in the CY 2025 OPPS/ASC final rule with comment period (89 FR 94514 through 94521), we believe that increasing the influence of the Safety of Care measure group is a necessary and appropriate methodological change. Patient safety is cornerstone to healthcare delivery and the foundational principle of professional oaths is to “do no harm.” Prioritizing safety for both patients and healthcare workers aligns with this fundamental commitment. Considering the public input received and further internal analyses conducted, we proposed to make the following modifications to the Overall Hospital Quality Star Rating methodology: (1) implement a 4-star cap for hospitals in the lowest-performing quartile of the Safety of Care measure group for the 2026 Overall Hospital Quality Star Rating, and (2) implement a blanket 1-star reduction for hospitals in the lowest-performing quartile of the Safety of Care measure group for the 2027 Overall Hospital Quality Star Rating and thereafter. Both the 4-star cap and the blanket 1-star reduction apply to hospitals with at least three measures in the Safety Measure Group.

\433\ https://www.cms.gov/files/document/cms-national-quality-strategy-handout.pdf.

The Overall Hospital Quality Star Rating provides a summary of certain existing hospital quality information on Medicare.gov \434\ based on publicly available quality measure results reported through CMS' hospital quality measurement programs, by assigning hospitals between 1 and 5 stars, a way that is simple and easy for patients to understand (85 FR 86193). The Overall Hospital Quality Star Rating methodology was developed and is maintained according to the guiding principles of scientific validity, maximizing inclusion of hospitals and measure information, accounting for heterogeneity of available measures and hospital reporting, accommodating changes in the underlying measures, aligning with CMS hospital quality measure programs to the extent feasible, transparency of the methodology, and responsiveness to input from interested parties. The Overall Hospital Quality Star Rating was first introduced and reported on our Hospital Compare website in July 2016 (now reported on Care Compare on Medicare.gov) and has been published multiple times. In this rule, for the Overall Hospital Quality Star Rating, the term “publish” refers to the public posting of the Overall Hospital Quality Star Rating and “refresh” refers to the public posting quality measure and program data via

Care Compare on Medicare.gov or its successor website.

\434\ https://www.medicare.gov/care-compare/resources/hospital/overall-star-rating.

In the CY 2021 OPPS/ASC final rule with comment period (85 FR 86193), we codified the Overall Hospital Quality Star Rating methodology, including several methodology refinements, intended to improve the simplicity and predictability of measure emphasis within the methodology over time, and comparability of ratings among hospitals. We also finalized the inclusion of Veterans Health Administration (VHA) hospitals and Critical Access Hospitals (CAHs) in the Overall Hospital Quality Star Rating. In the CY 2023 OPPS/ASC final rule with comment period (87 FR 72233), we provided additional information on the previously finalized policy to incorporate VHA hospitals and finalized a proposal to amend 42 CFR 412.190 to revise how we would publish the Overall Hospital Quality Star Rating annually. In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94514 through 94521) we summarized public input received on the following potential methodological updates to greater emphasize patient safety in the Overall Hospital Quality Star Rating: (1) Reweighting the Safety of Care Measure Group, (2) Policy-based 1-Star Reduction for Poor Performance on Safety of Care, and (3) Reweighting the Safety of Care measure group combined with a Policy-based Star Rating Cap. We refer readers to section XXIV. (Overall Hospital Quality Star Rating Modification to Emphasize the Safety of Care Measure Group: RFI) of the CY 2025 OPPS/ASC final rule with comment period (89 FR 94514 through 94521) for additional information.

Measures reported on the provider comparison tool on Medicare.gov \435\ that meet the criteria for inclusion in the Overall Hospital Quality Star Rating are organized into five conceptually coherent measure groups: Safety of Care, Mortality, Readmission, Patient Experience (all of which include outcome measures), and Timely and Effective Care (which includes a selection of process measures).

\435\ https://www.medicare.gov/care-compare/.

The current Overall Hospital Quality Star Rating methodology includes eight general steps. First, measures are selected from those publicly reported on Care Compare on Medicare.gov through certain CMS hospital inpatient and outpatient quality programs. Second, the direction of all included measures that indicate better performance with a lower score are reversed to uniformly reflect that a higher score indicates better performance for all the measures, and all measure scores are standardized to a single, common scale to account for differences in measure score units. Third, measures are arranged into measure groups. Each measure group contains several publicly reported measures to produce a robust measure group score, which is reflective of differences in hospital quality. Fourth, the measure group scores are calculated as a simple average of the measure scores. Measure group scores are then standardized to a common scale, making varying scores comparable. Fifth, the hospital summary score is calculated as a weighted average of the standardized measure group scores. Specifically, each measure group score is multiplied by the assigned weight for that measure group. The weighted measure group scores are then summed up to generate the hospital summary score. If a hospital has no measure scores in a measure group (for example, by not achieving sufficient sample size in any of the measures), the weight is redistributed proportionally across the remaining measure groups. Sixth, minimum reporting thresholds are applied. To receive an Overall Hospital Quality Star Rating, hospitals must report at least three measures in each of at least three measure groups, one of which must be either the Mortality or Safety of Care measure groups. Seventh, peer grouping is applied. Hospitals are grouped into one of three peer groups based on the number of measure groups for which they report at least three measures: a three-measure group peer group, a four-measure group peer group, and a five-measure group peer group. Eighth, a clustering algorithm is applied within each peer group to assign hospital summary scores to Overall Hospital Quality Star Ratings so that 1 star is the lowest and 5 stars is the highest.

For additional details regarding the current methodology, we refer readers to Sec. 412.190(d) and the Overall Hospital Quality Star Rating Methodology Reports, available at https://qualitynet.cms.gov/inpatient/public-reporting/overall-ratings/resources.

In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94514 through 94521), we presented three options and analyses (utilizing data from the July 2023 publication of the Overall Hospital Quality Star Rating) for potential methodological updates to emphasize Safety of Care in the Overall Hospital Quality Star Rating and summarized the public comments received. The majority of commenters did not support updating the methodology at that time. While some commenters expressed support for potential changes, there was no consensus on a preferred option (reweighting, the policy-based 1-star reduction, or reweighting combined with the 4-star cap). We refer readers to the CY 2025 OPPS/ASC RFI (89 FR 94514 through 94521), where we detailed the importance of prioritizing Safety of Care within the Overall Hospital Quality Star Rating.

Following the publication of that final rule, we conducted further internal analyses utilizing updated data from the July 2024 publication of the Overall Hospital Quality Star Rating (the most recent publicly released results as of the writing of the CY 2026 OPPS/ASC proposed rule) to reassess the correlation between the Safety of Care measure group and performance in the Overall Hospital Quality Star Rating.

To receive an Overall Hospital Quality Star Rating, hospitals must have at least three measures in each of at least three measure groups, one of which must be Mortality or Safety of Care. However, because the application of minimum reporting thresholds and peer grouping assignment occur strictly after the calculation of measure group scores and overall summary scores, any hospital with at least one measure in any group will have a measure group score for that group--that is, once a hospital meets the Overall Hospital Quality Star Rating reporting threshold, all measure groups for which it has any measure scores are included in its rating. In other words, a hospital with one or two Safety of Care measures can still receive an Overall Hospital Quality Star Rating if it still has at least three measures in Mortality and in two of the other measure groups; in this case, the hospital would still receive a Safety of Care measure group score based on the one or two measures it does have. Only a hospital qualifying for an Overall Hospital Quality Star Rating with zero Safety of Care measures would not have a Safety of Care measure group score.

There were 2,847 hospitals that met the criteria to receive an Overall Hospital Quality Star Rating in 2024. Among the 2,847 rated hospitals, 2,803 (99 percent) had at least one Safety of Care measure and therefore received a Safety of Care measure group score, while 2,475 (87 percent) had at least three Safety of Care measures. Our analysis showed that hospitals in the lowest-performing quartile of the Safety of Care measure group tended to receive lower Overall Hospital Quality Star

Ratings (being more likely to receive 1 or 2 stars and less likely to receive 4 or 5 stars than other hospitals) (Table 141). However, some hospitals performed in the lowest quartile (lowest-performing 25 percent, indicating poor Safety of Care performance relative to other hospitals) of the Safety of Care measure group and still received a 5- star rating. Of the 2,847 hospitals that received an Overall Hospital Quality Star Rating, 695 hospitals scored in the lowest quartile of the Safety of Care measure group, of which 595 hospitals had at least three Safety of Care measures. Of these 595 hospitals, 14 received a 5-star rating, representing 0.5 percent of all rated hospitals (Table 141). These 14 hospitals attained a 5-star rating despite having the lowest quartile Safety of Care measure group performance by achieving high scores across the other measure groups. [GRAPHIC] [TIFF OMITTED] TR25NO25.228

As we noted in the CY 2025 OPPS/ASC final rule with comment period (89 FR 94514 through 94521), we believe that a methodological change to increase the importance of the Safety of Care measure group is appropriate. This change is informed by landmark reports on healthcare quality,436 437 along with the COVID-19 public health emergency, which revealed persistent patient and workforce safety risks and system vulnerabilities.\438\ In response, Federal efforts--such as the National Action Alliance to Advance Patient and Workforce Safety and recommendations from the President's Council of Advisors on Science and Technology--are reinforcing patient safety as a national priority, aligned with CMS' initiatives like the National Quality Strategy and the Universal Foundation.439 440 441 In particular, addressing the issue of hospitals receiving a high Overall Hospital Quality Star Rating despite performing in the lowest quartile of the Safety of Care measure group is critical to achieving CMS' vision of emphasizing and aligning the importance of patient safety across CMS programs. We therefore proposed to make the following two-stage methodologic updates to Sec. 412.190(a)(2) and adding a new paragraph (a)(3)); the first stage would be a narrow but focused transitional step to promptly address the most pressing concern that hospitals in the lowest-performing quartile of the Safety of Care measure group achieve the highest possible Overall Hospital Quality Star Rating while allowing hospitals and interested parties more time to prepare for the second stage, which will increase the impact of the Safety of Care measure group across all hospitals more broadly.

\436\ Institute of Medicine (US) Committee on Quality of Health Care in America, Kohn, L.T., Corrigan, J.M., & Donaldson, M.S. (Eds.). (2000). To Err is Human: Building a Safer Health System. National Academies Press (US).

\437\ Quality of Health Care in America. (2001). Crossing the Quality Chasm: A New Health System for the 21st Century. National Academies Press (US).

\438\ Agency for Healthcare Research and Quality. (February 2021). National Healthcare Quality and Disparities Report chartbook on patient safety. Rockville, MD. Available at https://www.ahrq.gov/sites/default/files/wysiwyg/research/findings/nhqrdr/chartbooks/patientsafety/2019qdr-patientsafety-chartbook.pdf.

\439\ AHRQ. (2023). National Action Alliance To Advance Patient and Workforce Safety. https://www.ahrq.gov/cpi/about/otherwebsites/actionalliance.html.

\440\ https://bidenwhitehouse.archives.gov/wp-content/uploads/2023/09/PCAST_Patient-Safety-Report_Sept2023.pdf.

\441\ Fleisher, L.A., Schreiber, M., Cardo, D., Srinivasan, A. (2022). Health Care Safety during the Pandemic and Beyond--Building a System That Ensures Resilience. The New England Journal of Medicine, 386(7): 609-611. DOI: 10.1056/NEJMp2118285.

We also proposed changes to paragraphs (b)(1), (e) and (f) to reflect updates to the regulation text uses of Overall Hospital Quality Star Rating and Care Compare on Medicare.gov language. In addition, we proposed removing the reference to “as defined in Sec. 400.200 of this chapter.”

For the methodologic updates: Stage 1: Implement a 4-Star Cap for Hospitals in the Lowest Quartile of the Safety of Care Measure Group Performance Beginning in 2026 (Sec. 412.190(d)(9)(i))

We proposed to limit hospitals in the lowest quartile of Safety of Care (based on at least three measure scores) to a maximum of 4 stars out of 5. The Overall Hospital Quality Star Rating methodology would be unchanged through step eight with the exception of redesignating paragraph (d)(5) as (6), and paragraph (d)(6) as (5) (assignment of star ratings using K-means clustering as described previously in this section), with the cap being applied as a new “step nine”: Any hospital that is assigned 5 stars in step eight but has a lowest quartile Safety of Care score (based on at least three Safety of Care measures) would be reassigned to 4 stars.

Using 2024 Overall Hospital Quality Star Rating data, implementing a cap of 4 stars in the lowest quartile of Safety of Care with at least three safety measures would result in 14 hospitals, out of 2,847 hospitals, receiving a lower Overall Hospital Quality Star Rating. This update provides a targeted, direct, and timely solution to the acute concern of hospitals receiving the highest possible 5-star rating despite performing in the lowest quartile of the Safety of Care measure group. Further, the implementation timeline reflects a deliberate and proactive effort to act swiftly and strategically, reinforcing patient safety as a national priority.

We acknowledge in the CY 2025 OPPS/ASC final rule with comment period that only applying a 4-star maximum to hospitals in the lowest quartile of Safety of Care with at least three safety measures would have less impact than other options discussed in that rule. However, to promptly address the most pressing concern, the proposed 4-star maximum functions as an interim step, allowing hospitals and interested parties additional time to prepare for Stage 2: Stage 2: Implement a Blanket 1-Star Reduction for Hospitals in the Lowest Quartile of Safety of Care Measure Group Performance for the 2027 Overall Hospital Quality Star Ratings and Later Years (Sec. 412.190(d)(9)(ii))

We proposed to reduce the Overall Hospital Quality Star Rating of any hospital in the lowest quartile of Safety of Care (based on at least three measure scores) by 1 star, to a minimum 1-star rating. The Overall Hospital Quality Star Rating methodology would be unchanged through step eight (assignment of star ratings using K-means clustering), with the blanket reduction replacing the 4-star cap in the new step nine: any hospital assigned a 2, 3, 4, or 5-star rating in step eight, but that has a lowest quartile Safety of Care score (based on at least three Safety of Care measures) would be reduced to 1, 2, 3, or 4 stars, respectively.

Using 2024 Overall Hospital Quality Star Rating data, applying a 1- star reduction for all hospitals in the lowest quartile of Safety of Care with at least three safety measures would result in 459 hospitals, out of 2,847 hospitals, receiving a lower Overall Hospital Quality Star Rating. This update would emphasize safety by applying a higher standard for patient safety to hospitals across a broad range of overall performance, rather than limiting it to the few 5-star hospitals in the lowest quartile of Safety of Care (with at least three Safety of Care measures). Since the minimum possible Overall Hospital Star Rating will remain 1 star, hospitals already getting one star would not get a further star reduction and therefore would effectively be exempt from this adjustment consistent with established assignment of ratings between 1-5 whole stars (85 FR 86193). This approach also aligns with CMS' overarching objective of advancing patient safety and reinforcing our commitment to continuous improvement across the healthcare system.

When determining the quartiles of Safety of Care measure group scores, we will use the distribution from all hospitals with at least 1 Safety of Care measure whether they qualify for an Overall Hospital Quality Star Rating, in alignment with the guiding principle of the Overall Hospital Quality Star Rating of inclusiveness of hospital and measure information.

Using the data for the July 2024 Overall Hospital Quality Star Rating, we evaluated the proportion of hospitals that would be impacted by the proposed methodological changes, stratified by various hospital characteristics (Table 142). As previously noted, a larger proportion of hospitals would be impacted by the blanket 1-star reduction (Stage 2 proposed methodological change) compared to the targeted 4-star cap (Stage 1 proposed methodological change). Our simulation revealed that teaching hospitals, non-safety-net hospitals, VHA hospitals, non-CAHs, large hospitals (100+ beds), urban hospitals, and non-specialty hospitals could be more likely to observe a change in Overall Hospital Quality Star Rating by both Stage 1 and Stage 2 proposed methodological changes than their counterparts. We recognize that with only 14 hospitals experiencing a change in Overall Hospital Quality Star Rating by the Stage 1 proposed methodological change, the general ability of this observation is limited. In part, this is because these hospitals are more likely to receive an Overall Hospital Quality Star Rating and have three or more Safety of Care measures than their non-teaching, safety-net, non-VHA, CAH, small, rural, and specialty counterparts (Table 142). However, these differences in hospital characteristics are not strongly determinative of a hospital's overall rating, with hospitals of any characteristic being capable of receiving either high or low ratings. BILLING CODE 4120-01-P

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We received public comments on these proposals. The following is a summary of the comments we received and our responses.

Comment: Many commenters support our proposal to emphasize the Safety of Care measure group within the Overall Hospital Quality Star Rating methodology utilizing a two-stage approach, which would implement a 4-star cap in CY 2026 for hospitals in the lowest quartile of Safety of Care measure group performance (and with at least three Safety of Care measures), followed by a uniform 1-star reduction for hospitals in the lowest quartile of Safety of Care measure group performance (and with at least three Safety of Care measures) beginning in CY 2027. Commenters agreed that patient safety is foundational to assessing hospital quality and should be heavily emphasized in the Overall Hospital Quality Star Rating. Commenters stated increasing the weight of Safety of Care aligns the Overall Hospital Quality Star Rating with patient priorities and would encourage hospitals to invest in safety improvements, thereby increasing transparency and accountability across healthcare systems, and incentivizing improvements in patient safety. One commenter anticipates the proposed updates will support the goals of Pay for Performance programs (like Hospital-Acquired Condition Reduction Program (HACRP)), drive improvements across other Overall Hospital Quality Star Rating measure groups and encourage policies that improve patient satisfaction and promote timely care, while maintaining a strong focus on quality metrics and transparency.

Response: We thank commenters for their support of the proposed modification to the Overall Hospital Quality Star Rating methodology which aligns with our vision to emphasize the importance of patient safety across CMS programs.

Comment: In addition to general support, commenters offered several specific suggestions and considerations. Commenters supported CMS's efforts to strengthen the role of patient safety in the Overall Hospital Quality Star Rating and urged the agency to proceed thoughtfully, with continued interested party engagement and a focus on equitable, transparent implementation. A few commenters recommended that CMS conduct additional testing or simulation of the proposed methodology before full implementation, to allow for refinement and avoid confusion or disincentivizing reporting. A few commenters requested more information and early notification on hospital performance on the Safety of Care measure group to support course correction ahead of public reporting. One commenter highlighted the potential for disproportionate impact on small, rural, and safety-net hospitals and encouraged CMS to monitor these effects during implementation. One commenter expressed concern that hospitals could avoid submitting Safety of Care measures to maintain a higher Overall Hospital Quality Star Rating and recommended awarding a 4- or 5-star rating only to hospitals that submit at least three measures from the Safety of Care group.

A number of commenters suggested alterations to the proposed policy. A few commenters recommended capping hospitals in the lowest quartile of Safety of Care at no more than 2 stars or prohibiting 4- or 5-star ratings altogether, for hospitals with poor patient safety performance. These commenters emphasized that facilities with a pattern of avoidable harm should not be classified as “average” or “above average” in overall quality. Additionally, one commenter advocated for CMS to ensure that the Overall Hospital Quality Star Rating is reported at the individual facility (CCN) level, rather than at the health system level, to ensure that patients receive accurate and meaningful information about the specific hospitals where they receive care.

A few commenters encouraged CMS to support data infrastructure improvements, such as automating quality reporting, aligning state reporting standards, and exploring use of the Trusted Exchange Framework and Common Agreement (TEFCA) for data sharing. One commenter noted the role of occupational therapy in reducing patient harm and improving Safety of Care outcomes and encouraged CMS to consider how multidisciplinary interventions contribute to improved patient safety performance.

Response: We thank commenters for supporting our proposal. We appreciate commenters' suggestions to conduct additional testing before implementation and to provide additional Safety of Care measure group information; however, we disagree that additional testing is needed. We refer commenters to the testing results in this rule, as well as the results calculated using the July 2023 Overall Star Rating as reported in the CY 2025 OPPS/ASC final rule with comment period (89 FR 94514 through 94521) which produced similar findings. We also appreciate the concern expressed regarding small, rural, and safety-net hospitals. We note that in our July 2024 Overall Hospital Quality Star Rating simulated results, hospitals with these characteristics were less likely to observe a change in their rating through Stage 1 and Stage 2 compared to their counterparts (90 FR 33787). We intend to monitor how different types of hospitals, such as small, rural, and safety-net hospitals, may be affected by this methodology update, as we have throughout the ongoing maintenance of the Overall Hospital Quality Star Rating.

We appreciate the commenter's suggestion to report the Overall Hospital Quality Star Rating at the CCN (facility) level rather than the health system level; while this change is not feasible at this time, CMS will consider future reevaluation work related to this suggestion. As noted in the CY 2021 OPPS/ASC final rule with comment period (85 FR 85866), “hospitals sharing the same CCN must combine data collection and submission across their multiple campuses for all clinical measures for public reporting purposes. Under our current policy, we publish quality data by the corresponding hospital CCN and indicate instances where data from two or more hospitals are combined to form the publicly reported measures on the Hospital Compare website and the successor Care Compare website. In the CY 2014 OPPS/ASC proposed rule (78 FR 43645), we noted that in a situation in which a larger hospital has taken over ownership of a smaller hospital, the smaller hospital's CCN is replaced by the larger hospital's CCN (the principal CCN). For data display purposes, we only display data received under the principal CCN. If both hospitals submit data, those data are not distinguishable in the warehouse [107] and are calculated together as one hospital” (85 FR 86182).

We appreciate the commenter's concern that hospitals may want to avoid reporting unfavorable Safety of Care results to avoid receiving a lower Overall Hospital Quality Star Rating. The Overall Hospital Quality Star Rating explicitly includes only measures for which all hospitals are required to collect and submit data by CMS's hospital quality reporting & payment programs. Each underlying measure has established thresholds (such as minimum case count) for a hospital's score to be publicly reported to ensure reliable measurement; if a hospital does not meet the threshold for a measure, its score is not publicly reported. In this case its score is considered “missing” and its performance does not factor into its Overall Hospital Quality Star Rating. We note this determination is made exclusively by CMS after all data are submitted; in general, hospitals cannot pick and choose which measures of the Overall Hospital Quality Star Rating they submit, and cannot choose to have

any measure withheld from public reporting.

We thank commenters for their suggestion to cap hospitals in the lowest quartile of Safety of Care at no more than 2 stars or prohibiting 4- or 5-star ratings altogether to prevent these hospitals from being categorized as “average” or “above average” in overall quality. We emphasize that while this update will increase the emphasis on Safety of Care, the Overall Hospital Quality Star Rating is still intended to be a summary of overall quality, and other measure groups will still contribute meaningfully to a hospital's rating.

We appreciate the comment regarding TEFCA. It is not addressed here, as it is out-of-scope for this methodology update. We also appreciate the commenter's suggestion to consider the role of occupational therapy in reducing patient harm and how other clinical interventions can improve Safety of Care. This proposed Overall Hospital Quality Star Rating methodology update is meant to complement and support other efforts within CMS to drive improvements in patient safety, most notably the HACRP. We believe this update will further encourage hospitals to explore such means to improve safety.

Comment: A few commenters discussed specific concerns with the potential disproportionate impact of the proposed approach on small and rural hospitals. One commenter explained that these hospitals often have limited Safety of Care measures available for reporting, making the Safety of Care measure group heavily weighted in their Overall Hospital Quality Star Rating. A few commenters stated that emphasis on this measure group would skew overall ratings and diminish the value of the system for small and rural hospitals. A few commenters noted that rural facilities also face resource constraints and challenges related to staffing and infrastructure, which may force them to divert resources away from other critical measure groups to prioritize Safety of Care. One commenter noted that rural hospitals already contend with physician shortages, maternity care deserts, and ongoing obstetric unit closures, and cautioned that capping or reducing these hospitals' Overall Hospital Quality Star Rating could exacerbate rural health disparities, particularly in maternal health outcomes. One commenter noted that applying a uniform star rating reduction across all hospitals could misrepresent performance and deepen existing disparities in how rural hospital quality is perceived. A few commenters recommended exempting hospitals that report only one or two Safety of Care measures from the proposed 1-star reduction and instead adopt a stratification or rural-specific risk adjustment to avoid disadvantaging these hospitals.

Response: We thank commenters for their concerns regarding the impact of the proposed update to the Overall Hospital Quality Star Rating methodology for small and rural hospitals. As demonstrated in Table 142, there are high, average, and low performers of all hospital types both in Safety of Care and in the Overall Hospital Quality Star Rating more generally. As demonstrated in Table 142, using July 2024 simulation data, 1 percent of CAHs were rated and reported at least three Safety of Care measures compared to 75 percent of non-CAH's. Similarly, 35 percent of rural hospitals were rated and reported at least three Safety of Care Measures compared to 75 percent of urban hospitals. Furthermore, comparing the “N Rated & 3+ Safety measures” and “N Rated & 3+ measures & Q1 Safety” columns in Table 142, shows that among those meeting the criteria outlined in those columns, there were close to 25 percent of hospitals performing in the bottom quartile of Safety of Care regardless of hospital type. Therefore, there is not a strong association between hospital type and actual Safety of Care performance.

Comment: A few commenters suggested that hospitals with greater patient volumes scored on more Safety of Care measures (particularly larger facilities such as teaching hospitals or VHA hospitals) may have higher potential for score reductions, not because of poor quality, but because they are more exposed to scoring variation; or, conversely, that hospitals without enough data to calculate performance on Safety of Care measures may avoid Overall Hospital Quality Star Rating reductions altogether.

Response: We thank commenters for their concerns regarding the potential impact of the proposed update to the Overall Hospital Quality Star Rating methodology for larger hospitals. As demonstrated in Table 142, there are high, average, and low performers of all hospital types both in Safety of Care and in the Overall Hospital Quality Star Rating more generally. While structural differences may exist for larger, higher-acuity hospitals (such as VHA hospitals and academic medical centers) that could make improved Safety of Care performance more difficult to achieve, we note that these hospitals do tend to both have more Safety of Care measures available and larger volumes for the measures they do have, both factors that increase measure reliability and reduce the possibility of score reductions based on chance variation.

Comment: A few commenters stated that hospitals caring for a significant proportion of high-acuity and complex patients (such as teaching hospitals and VHA hospitals) could be disproportionately affected by higher numbers of adverse events captured in the Safety of Care measures, even if overall quality is high. One commenter suggested that Safety of Care measures may not sufficiently account for clinical complexity, particularly for large tertiary hospitals and those performing high volumes of complex cases, which could obscure meaningful quality differences and discourage hospitals from treating high-risk patients. The commenter recommended implementation of additional safeguards such as more detailed risk adjustment, procedure- specific stratification, clear definitions of complications, and a peer review or appeals process before automatically reducing a hospital's rating. One commenter suggested that a blanket 1-star reduction might disproportionately affect institutions caring for vulnerable populations such as: hospitals serving older adults, patients with chronic conditions, or communities with limited access to post-acute care. The commenter was concerned this could suppress patient volume, exacerbate disparities, and create challenges in recruiting clinical talent, ultimately undermining patient safety outcomes.

Response: We thank commenters for their concerns regarding the impact of the proposed update to the Overall Hospital Quality Star Rating methodology for hospitals with higher-acuity or more clinically complex patients. We note that all individual measures comprising the Safety of Care group are already risk adjusted for clinical factors at the measure level prior to reporting, and thus such differences are already implicitly factored into the Safety of Care measure group score. For example, “calculations for the Hospital-Associated Infection (HAI) measures adjust for differences in the characteristics of hospitals and patients using a Standardized Infection Ratio.” \442\ This increased emphasis on Safety of Care supports other ongoing efforts within CMS to promote patient safety, chiefly including the HACRP,

and aligns with CMS's intent to incentivize improvements in patient safety for all patients. Finally, regarding a commenter's suggestion to implement a peer review or appeals process before applying the 4-star cap or 1-star reduction, we do not believe a peer review or an appeals process is necessary since hospitals can use preview periods to review the methodology and their results, as well as reach out with questions. Since the Overall Hospital Quality Star Rating is calculated using individual measures publicly reported via Care Compare on Medicare.gov, hospitals can use established processes under each program to review and correct individual measure scores. Given that the Overall Hospital Quality Star Rating is published annually, there are regular opportunities for hospitals to improve their performance.

\442\ Centers for Medicare & Medicaid Services. (n.d.). Complications & deaths. Provider Data Catalog. https://data.cms.gov/provider-data/topics/hospitals/complications-deaths#complications.

Comment: A few commenters suggested that reputational penalties for facilities could exacerbate financial consequences, particularly as the Overall Hospital Quality Star Rating is increasingly tied to payer contracts and value-based payment programs.

Response: We appreciate commenters' concerns regarding reputational and financial impacts of the Overall Hospital Quality Star Rating. We want to emphasize that the Overall Hospital Quality Star Rating is a summary of quality measurements that are already publicly reported as part of CMS hospital quality reporting & payment programs, as a simple, easily interpreted score to assist consumers and the public in assessing a hospital's overall quality. While the individual measures comprising the Overall Hospital Quality Star Rating factor into payment determination of those quality programs, the Overall Hospital Quality Star Rating itself does not have any direct impact on CMS payment.

Comment: Several commenters opposed adopting a quartile-based methodology for categorizing performance in the Safety of Care measure group. Commenters stated that the quartile approach is statistically flawed, arbitrary, and not aligned with the purpose of assessing hospital safety. A few commenters noted that quartiles reflect only relative ranking, not performance against an absolute or meaningful standard. A few commenters noted under this method, hospitals may be labeled as “low performers” even if they demonstrate strong safety outcomes, while hospitals ranked in the top quartile may not necessarily meet high safety benchmarks. A few commenters expressed that this creates volatility, as a hospital's placement could shift between quartiles based on small changes in peer performance rather than meaningful changes in its own outcomes.

A few commenters proposed replacing the quartile-based approach with a system based on fixed, evidence-based benchmarks that reflect meaningful differences in performance, rather than rankings relative to peers. A few commenters recommended using thresholds based on standard deviations below the mean, which would limit 1-star reductions to a smaller proportion of hospitals and more precisely target those with significantly lower Safety of Care performance. A few commenters highlighted that the impact of the proposed quartile-based 1-star reduction would be disproportionately broad. They stated that reducing ratings for nearly 20 percent of hospitals is excessive relative to the identified issue and supported alternative statistical methods to more precisely identify poor performers or outliers.

A few commenters also identified a concern with the calculation of the lowest quartile as described in the CY 2026 OPPS/ASC proposed rule. One commenter noted that the calculation included hospitals with fewer than three Safety of Care measures in the distribution and suggested that only hospitals with at least three measures be considered when calculating the quartiles to produce a more accurate assessment of performance, reduce volatility, and increase comparability in future public reporting.

Response: We thank commenters for expressing their concerns regarding the quartile-based methodology for categorizing performance in the Safety of Care measure group. We acknowledge that using a quartile-based approach for the 1-star reduction could sometimes result in hospitals receiving a lower Overall Hospital Quality Star Rating even if overall performance improved. We reiterate the foundational principle of “do no harm” in our rationale for making this methodology update to the Safety of Care measure group. The quartile approach to define poor performance emphasizes patient safety globally; all hospitals should be working to produce safer outcomes and minimize adverse events in their facilities. Additionally, we retire “topped out” measures on which most hospitals have come to perform highly (in which case such measures would no longer be eligible for the Overall Hospital Quality Star Rating). Currently no Safety of Care measures approach topped-out status, indicating continued room for improvement.

We appreciate commenters' suggestions to replace the quartile-based approach with a fixed benchmark or statistical outlier approach, as well as suggestions that the quartile-based approach would impact too many hospitals. We believe the quartile-based approach in conjunction with the requirement of at least three Safety of Care measures provides a suitable balance between emphasizing Safety of Care broadly across all hospitals (not just at a few extremely low performers) while also ensuring that only hospitals with demonstrably below-average performance would be subject to Overall Hospital Quality Star Rating reduction.

We acknowledge commenters' concern that, in the context of the 1- star reduction methodology update, the quartiles are inclusive of all hospitals that report at least one Safety of Care measure (even though only hospitals that report at least three Safety of Care measures will be subject to the 1-star reduction). We base the quartile calculation on the full Safety of Care measure group score distribution in order to be inclusive of the national Safety of Care landscape (including hospitals with Safety of Care data that do not receive an Overall Hospital Quality Star Rating). This is in alignment with the Overall Hospital Quality Star Rating's guiding principles of inclusiveness of quality information. We also note that this accommodates potential for collective improvement--if hospitals with at least three Safety of Care measures improve in performance relative to those with one or two, then fewer than 25 percent of those with at least three measures would find themselves in that lowest overall quartile. Conversely, if using only rated hospitals with at least three Safety of Care measures for the distribution, by definition 25 percent of all such hospitals would be subject to reduction.

Comment: Several commenters raised concerns that this proposed update to the Overall Hospital Quality Star Rating overvalues the safety relative to other aspects of hospital quality that are also important to patients. Additionally, commenters stated that singling out the Safety of Care measure group for additional emphasis over the other measure groups does not accurately reflect overall hospital quality.

A few commenters also stated concern that the Overall Hospital Quality Star Rating already struggles to summarize diverse domains of care into a single composite score and the proposed updates may exacerbate these limitations. Commenters stated that further increasing the influence of the Safety of Care measure group would

undermine the balance among measure groups, potentially downgrading hospitals that perform well in other areas of quality. A few commenters stated that this could misrepresent overall quality, unfairly penalize hospitals addressing isolated safety issues, and erode public trust in the ratings.

A few commenters expressed concern that this approach could distort results, limit the value of the ratings for patients, and fail to drive meaningful performance improvement, particularly given that many hospitals already receive two- or three-star ratings that signal a need for improvement in multiple respects.

Response: We appreciate commenters' concern that the proposed methodology updates could exacerbate perceived limitations of the Overall Hospital Quality Star Rating, and acknowledge concerns related to the general concept of the Overall Hospital Quality Star Rating serving as a quality summary based on a diverse set of measures.

We also appreciate commenters' concerns regarding the proposed methodology updates and how emphasizing the Safety of Care measure group through the Star Cap and 1-star reduction in turn deemphasizes the influence of the other four measure groups. We note that even hospitals in the lowest quartile of Safety of Care can still achieve ratings as high as 4 stars in this proposal based on strong performance in the other measure groups; while this proposed update increases the emphasis on Safety of Care relative to other measure groups, it does not drastically alter the overall approach.

We reiterate that “. . . Federal efforts--such as the National Action Alliance to Advance Patient and Workforce Safety and recommendations from the President's Council of Advisors on Science and Technology--are reinforcing patient safety as a national priority, aligned with CMS' initiatives like the National Quality Strategy and the Universal Foundation.[265[thinsp]266[thinsp]267].” The proposed methodology updates better align the Overall Hospital Quality Star Rating with other CMS efforts.

Patients are advised through Care Compare on Medicare.gov to consider a variety of factors beyond the Overall Hospital Quality Star Rating when choosing a hospital. The Overall Hospital Quality Star Rating is intended to serve as a complementary tool to existing efforts (such as the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) star ratings (implemented in April 2015)) and will not replace the reporting of any individual quality measures.

Comment: A few commenters raised concerns that the Safety of Care measure group is based on a limited set of measures, which could reduce comparability across hospitals and may not fully capture the complexity of patient safety performance. A few commenters noted that the current measure set is narrow in scope and predominantly inpatient-focused, making the Safety of Care measure group less applicable to many hospitals; particularly low-volume rural and small hospitals may be unable to report on many of the included measures. One commenter encouraged CMS to identify patient safety measures that are relevant to a broader set of hospitals, including outpatient and observation settings. Another commenter recommended adding additional measures that capture broader dimensions of safety, such as patient safety indicators (PSIs), perinatal and maternal health measures, and Hospital Harm measures (contingent upon validation and interested party vetting). The commenter also recommended breaking down the PSI-90 composite into its individual component measures and weighing them appropriately to provide a more nuanced view of patient safety. Another commenter noted that the composition of the Safety of Care measure group is subject to change as CMS adds or removes measures from the various hospital quality reporting & payment programs.

Response: We thank commenters for their feedback on the composition of the Safety of Care measure group. As noted, the Overall Hospital Quality Star Rating summarizes existing measures that are already publicly reported via Care Compare on Medicare.gov as required by CMS. Accordingly, new measures are only added to the Overall Hospital Quality Star Rating after being first added to Care Compare on Medicare.gov (the requirements and timing of which are established by the relevant CMS program) and meeting established inclusion criteria. The Overall Hospital Quality Star Rating methodology is designed and intended to be flexible and accommodate changes to the measures publicly reported through Care Compare on Medicare.gov as the universe of measures required and reported via these CMS programs evolves.

Comment: A few commenters also emphasized that hospitals may be evaluated on different subsets of measures, which they believed undermined comparability and fairness in Overall Hospital Quality Star Rating. One commenter raised specific concerns regarding the comparability of ratings between large hospitals (with more Safety of Care measures) and small hospitals (with fewer).

Several commenters urged CMS to refine its approach by incorporating improved risk adjustment and stratification and ensuring that modifications to the Overall Hospital Quality Star Rating methodology do not unfairly affect hospitals based on facility type, patient acuity, or mission. Several commenters criticized the lack of adequate risk adjustment for social and demographic factors, noting that hospitals serving higher-risk, underserved, or rural populations could be unfairly affected despite delivering high-quality care. Commenters stated that this could lead to unintended consequences, such as exacerbating disparities or discouraging care for vulnerable populations.

Response: We thank commenters for their concerns regarding comparability of the Overall Hospital Quality Star Rating due to variation in hospital size and other contextual factors. We would like to note that “peer grouping” [Step 7 in the methodology] hospitals based on the number of measure groups for which they report at least three measures is intended to improve comparability of Overall Hospital Quality star ratings by accounting for differences in measure information. Peer grouping is applied independent of the measure and measure group reporting threshold and would therefore not result in any reduction in the number or type of hospitals receiving star ratings or the number or type of measures or measure groups contributing to hospital scores” (85 FR 86232). Therefore, peer grouping ensures hospitals are compared to other hospitals with similar quality measure information on an “apples-to-apples” basis. Furthermore, we acknowledge concerns that not all hospitals are scored on the same set of Safety of Care measures but note that the current methodology is designed to accommodate such differences in alignment with our guiding principle of inclusiveness of hospitals and measure information. In other words, the intention of the Overall Hospital Quality Star Rating is to summarize quality information that each hospital does in fact have publicly available, with each measure in a given group reflecting a common underlying construct.

We also thank commenters for their suggestions related to risk adjustment for social and demographic factors. As noted in the 2021 OPPS/ASC final rule with comment period, “In the past, we have not stratified or adjusted any of the

measures, measure groups, summary scores, or star ratings by social risk factor variables within the Overall Hospital Quality Star Rating methodology, primarily based on the original guiding principles of the Overall Hospital Quality Star Rating. The Overall Hospital Quality Star Rating is meant to summarize the existing quality measure information that is publicly reported through CMS programs, including Hospital IQR Program, Hospital OQR Program, HRRP, HAC Reduction Program, and Hospital VBP Program, on Hospital Compare or its successor websites. Individual measures undergo rigorous development and reevaluation processes under each program that include extensive analytic testing and interested parties engagement. As such, individual measure methodologies as specified under each program, including approaches to risk adjustment, are included within the Overall Star Rating. As measure data and methodologies are updated under each of the programs, they are subsequently reflected within the Overall Star Rating methodology” (85 FR 86218).

Comment: Several commenters suggested the proposal is methodologically flawed and not proportional to the issue it seeks to address. One commenter emphasized that the changes are being driven by a narrow concern affecting only 14 hospitals (0.5 percent of rated facilities) and do not justify a sweeping modification to the entire Overall Hospital Quality Star Rating framework. The commenter stated that the Overall Hospital Quality Star Rating system already oversimplifies hospital quality and that further emphasizing a single domain, particularly through penalties, risks distorting the meaning of the rating and diminishing its usefulness to patients.

A few commenters stated that the proposal would not lead to meaningful safety improvements and may instead confuse patients by implying that a lower Overall Hospital Quality Star Rating indicates poor safety, when the methodology may not support that conclusion. One commenter urged CMS to reconsider the proposed approach in favor of one that is more equitable, transparent, and methodologically sound.

Response: We thank commenters for their concern regarding whether the proposed Overall Hospital Quality Star Rating methodology updates adequately address the overall CMS goal of prioritizing patient safety across programs. We would like to highlight that, while eliminating the possibility of hospitals achieving a 5-star rating despite being in the lowest quartile of Safety of Care is part of the intent of this update, it is not the sole purpose; through the Stage 2 methodology update (1- star reduction), we are recognizing the broader Federal effort to reinforce patient safety as a national priority across hospitals more globally.

We appreciate a commenter's concern that the Overall Hospital Quality Star Rating oversimplifies hospital quality and that emphasizing Safety of Care distorts the intention of the Overall Hospital Quality Star Rating and diminishes its usefulness. However, we disagree and note that the Overall Hospital Quality Star Rating has always been intended to be an accessible, easily interpreted summary of available hospital quality information. Established measure groups and respective weightings were developed and maintained with interested parties, expert and public input upholding an Overall Hospital Quality Star Rating guiding principle of transparency.

We appreciate commenters' concern that some consumers may equate a lower Overall Hospital Quality Star Rating with poor Safety of Care performance. While it is true there will be cases in which a hospital receives a low Overall Hospital Quality Star Rating despite very good Safety of Care performance, this can be achieved only by having consistently poor performance across the other measure groups. We intend the Overall Hospital Quality Star Rating to remain a summary of all of a hospital's quality information; while this update will increase the emphasis on Safety of Care, the other measure groups will remain integral in determining a hospital's ultimate rating.

Comment: A few commenters encouraged CMS to adopt a more incremental and transparent approach to implementing the proposed methodologic updates to the Overall Hospital Quality Star Rating. Commenters expressed concerns about the timing and phased approach to implementing the proposed changes, recommending that CMS delay the proposal to allow hospitals sufficient time to respond and improve. A few commenters urged CMS to adopt a forward-looking approach to implementation, recommending that the proposed changes, particularly the star cap in 2026 and 1-star reduction in 2027, be delayed until at least 2028 to allow hospitals sufficient time to respond to the new methodology and improve safety performance. The commenters emphasized that the use of lagged data does not reflect current hospital safety performance, urging CMS to incorporate more current or near-real-time data sources such as electronic clinical quality measures (eCQMs) for public reporting. One commenter expressed concern that outdated or poorly contextualized data on Care Compare on Medicare.gov may mislead patients and harm hospitals' reputations, particularly when the timeframes for individual measures are inconsistent or poorly labeled. Another commenter stated if the proposal is finalized, hospitals should be provided with timely preview reports clearly indicating whether a hospital's Overall Hospital Quality Star Rating was downgraded due to Safety of Care performance.

Response: We acknowledge commenter's concern about outdated data and collection periods that do not always align across measures. However, the data collection period and refreshed timelines are established on a measure-by-measure basis so that results are released as soon as possible, while also enabling sufficient data collection for measure reliability and accounting for the time necessary to collect, process, and validate data and results.

We acknowledge commenters' concern with the implementation timing of the proposed Overall Hospital Quality Star Rating methodology updates. We believe the proposed approach is already an incremental process to first apply the 4-star cap in CY 2026 followed by the 1-star reduction in CY 2027. Furthermore, the Safety of Care RFI included in the CY 2025 OPPS/ASC Proposed Rule (89 FR 94514 through 94521) provided the public with information about potential methodology updates that were being considered by CMS. While we acknowledge concerns that a hospital may not have the opportunity to respond to performance results between the implementation of the star cap and the 1-star reduction, we note that the Safety of Care measure group and its component measures have been a prominent part of the Overall Hospital Quality Star Rating since its inception, with hospitals' Safety of Care performance already contributing substantially to their Overall Hospital Quality Star Rating. Furthermore, hospitals should always be striving to uphold patient safety in their care settings given the foundational principle of “Do no harm.”

We also acknowledge commenters' concern with the use of lagged data in the Overall Hospital Quality Star Rating; We note that the challenge of the lag between the data collection period, the public reporting of individual measures,

and the publication of the Overall Hospital Quality Star Rating is well known. The main driver of the gap is the data collection periods for the individual measures which is outside the purview of the Overall Hospital Quality Star Rating methodology, and often necessary as longer periods are needed for smaller volume hospitals. It takes longer periods of time to get sufficient samples for statistical stability for the risk-adjusted measures. Therefore, as noted in prior rules, “. . . the data collection period for each measure varies depending on measure specifications that set minimum case requirements to ensure individual measure reliability and meet the requirements of CMS quality programs, as detailed in each program's respective rules as well as on Hospital Compare or its successor website” (85 FR 86202). Regarding eCQMs specifically, as these measures are required for reporting through Care Compare on Medicare.gov, they will be assessed for measure inclusion criteria in the Overall Hospital Quality Star Rating. However, we want to highlight that data collection periods for eCQMs (as for all measures) are not dictated by the Overall Hospital Quality Star Rating but rather by their respective CMS quality program; the Overall Hospital Quality Star Rating remains a summary of quality data that has already been publicly reported.

We appreciate commenters' recommendations regarding hospitals being provided with preview reports that indicate if a 1-star reduction was applied. As in prior publications of the Overall Hospital Quality Star Rating, CMS will continue to provide Hospital-Specific Reports and supporting resources during the preview period to help hospitals understand and interpret their results.

Comment: A few commenters raised concerns that the proposed policy's complexity and punitive nature may confuse patients and providers and erode trust in the Overall Hospital Quality Star Rating system as a reliable public reporting tool. One commenter specifically expressed concern that the Stage 2 approach could cause sudden declines in ratings that patients and consumers may not understand. The commenter stated that CMS already uses other programs, such HACRP, to incentivize safety improvement and that layering additional reputational penalties may duplicate or conflict with existing incentives. The commenter added that focusing on modifying the Overall Hospital Quality Star Rating methodology itself does little to improve how safety is actually evaluated or advanced.

A few commenters called for increased transparency around the methodology including clearer documentation on how hospitals are grouped into peer comparisons, how quartiles are calculated, and how measure groups contribute to the Overall Hospital Quality Star Rating, to help hospitals anticipate and manage performance. A few commenters provided similar suggestions related to public documentation describing how patient safety measures are selected for each hospital and how performance distributions affect the Overall Hospital Quality Star Rating year after year. Commenters also recommended enhancing public education efforts to highlight what the Overall Hospital Quality Star Rating represents, preventing misinterpretation by patients and others.

Response: We acknowledge commenters' concerns about the staged process for the Overall Hospital Quality Star Ratings reductions, however more than 50 percent of hospitals already receive different ratings year-to-year just as a result of the evolution of the underlying data. The additional marginal effect of the 1-star reduction is fairly minimal in the scope of ordinary year-on-year changes and is likely less than the one-time impact of other significant methodological changes in past years (most significantly the switch from latent variable modeling to explicit average measure group scoring and the introduction of peer grouping) (85 FR 86193). Furthermore, this update reflects our belief (informed by interested parties' input) that patient safety should have greater emphasis than it does under the current methodology, and that this is a necessary and appropriate step to prevent hospitals from receiving unjustifiably high ratings despite poor Safety of Care outcomes.

We appreciate a commenter's position that there are existing CMS programs that drive patient safety improvement and that additional efforts may be conflicting, but we respectfully disagree and believe that further emphasis of patient safety in the Overall Hospital Quality Star Rating aligns with other efforts to improve patient safety including through HACRP.

We thank commenters for their suggestions related to transparency about peer groups, quartile calculation and measure group contributions. We would like to refer readers to resources related to these topics already publicly available. While hospitals' peer groups are not publicly reported (as a result of prior interested parties' feedback that suggested this may cause confusion for patients), a hospital's own peer group can be found in their Hospital-Specific Report. Additionally, detailed information about the peer grouping process is described in v4.1 of the Overall Hospital Quality Star Rating Methodology, available at https://qualitynet.cms.gov/inpatient/publicreporting/overall-ratings/resources. Peer group distribution as well as summary score ranges for each peer group can be found in the Quarterly Updates and Specifications Report that accompanies each Overall Hospital Quality Star Rating release.

In regard to how Safety of Care measures are selected for each hospital, in the process of assigning an Overall Hospital Quality Star Rating, all reported Safety of Care measures are incorporated. Hospitals participating in CMS programs are required to collect data for measures reported via Care Compare on Medicare.gov. Each underlying measure has established thresholds (such as minimum case count) for a hospital's score to be publicly reported to ensure reliable measurement. If a hospital does not meet threshold for a measure, a measure score for the hospital is not publicly reported, and therefore a score for that given measure does not factor into the Overall Hospital Quality Star Rating. However, in general, hospitals do not have a choice in measures for which they submit data, and for which their performance is scored and reported.

Comment: One commenter pointed to the significant methodological changes to individual measures finalized in the Fiscal Year (FY) 2026 Inpatient Prospective Payment System (IPPS) final rule (90 FR 36997 through 37027), such as the use of Medicare Advantage (MA) data, changes in risk adjustment models, removal of COVID-19 vaccination measures, and re-baselining of HAI measures, and urged CMS to delay implementation of Stage 2 for a year after updated data is publicly available and after conducting a comprehensive analysis of the combined effects before finalizing further penalties. The commenter noted implementing multiple methodological changes simultaneously may obscure the impact of individual updates, compound penalties that do not reflect actual quality performance, and undermine transparency by limiting public understanding and visibility.

Response: We acknowledge the concern expressed that methodologic changes in some underlying measures may subsequently affect the Overall Hospital Quality Star Rating. The Overall Hospital Quality Star Rating methodology was designed to

accommodate the ongoing evolution of publicly reported quality measures, including instances when existing measures make methodologic updates. CMS vets these updates extensively in advance with interested parties, experts, and the public based on established measure evaluation criteria to ensure the updated specifications are suitable for public reporting. The purpose of the Overall Hospital Quality Star Rating remains to simply summarize these publicly reported data, which must be independently validated as providing a meaningful quality signal prior to public reporting of any results.

https://qualitynet.cms.gov/inpatient/publicreporting/overall-ratings/resources

Comment: Commenters offered a variety of alternative approaches to address concerns with the proposed modifications to the Safety of Care measure group and the Overall Hospital Quality Star Rating.

A few commenters suggested that changes to the Overall Hospital Quality Star Rating, such as a star reduction, only be made if a hospital remains in the lowest quartile for multiple consecutive years, which would help account for normal performance variation and support long-term improvement efforts.

One commenter further proposed revising the minimum requirements for obtaining an Overall Hospital Quality Star Rating. The commenter suggested elimination of the Mortality domain as a minimum requirement and that hospitals be required to report on at least three Safety of Care measures to qualify for an Overall Hospital Quality Star Rating; thus, ensuring the measure group's performance is adequately represented and meaningful within the rating and reducing the need for blanket point reductions. A few commenters suggested alternatives to blanket penalties in public reporting, proposing the use of performance flags or annotations to highlight poor Safety of Care scores without reducing hospitals' Overall Hospital Quality Star Rating, thereby providing meaningful safety information while preserving rating comparability.

A few commenters encouraged CMS to increase the weight of the Safety of Care domain within the existing methodology (for example, from 22 percent to 30 percent) while reducing the weight of other domains proportionally, allowing safety to have a greater influence on the Overall Hospital Quality Star Rating without introducing categorical penalties. One commenter proposed that a more flexible, customizable Overall Hospital Quality Star Rating system that would allow users to assign their own weights to domains such as safety, mortality, or patient experience would reflect individual preferences and better supporting patient decision-making.

One commenter recommended CMS add additional rural-relevant patient safety measures or revise the methodology to include only measure groups with at least three reported measures to ensure composite scores more accurately reflect performance and do not discourage voluntary reporting of safety data, such as National Healthcare Safety Network (NHSN) HAI metrics. One commenter urged CMS to separate HAI measures from the broader Safety of Care measure group, allowing them to stand alone and improving the interpretability and actionability of these metrics for hospitals and the public alike. One commenter recommended exploring the use of more real-time structural patient safety measures, such as the Inpatient Hospital Patient Safety structural measure, to provide a more current and equitable assessment of safety performance. A few commenters specifically noted that many CAHs are excluded from the Overall Hospital Quality Star Rating due to measure reporting thresholds, and even when included, often report only one or two Safety of Care measures, which can disproportionately impact their Overall Hospital Quality Star Rating.

A few commenters called for improvements in data transparency, including clearer and more timely preview reports, enhanced technical assistance, and access to simulation tools to help hospitals prepare for the 2027 methodology change. A few commenters also called for CMS to provide plain-language explanations of methodological changes for patients, families, and advocates. One commenter emphasized the importance of engaging frontline clinicians and staff in future refinements and cautioned that changes to the Overall Hospital Quality Star Rating, such as a star reduction, could discourage transparency and self-reporting of safety events. Commenters urged CMS to implement these changes in a way that promotes fairness, supports continuous improvement, and maintains the credibility and usefulness of the Overall Hospital Quality Star Rating system.

Response: We appreciate commenters' alternative suggestions and recommendations to emphasize Safety of Care in the Overall Hospital Quality Star Rating methodology.

We acknowledge a commenter's recommendation to only apply the 1- star reduction to hospitals that are in the lowest quartile of the Safety of Care measure group for consecutive years. However, we want to reiterate that the goal of this methodology update is to emphasize patient safety across all hospitals, not just consistently low performers in the Safety of Care measure group.

We appreciate a commenter's suggestion to change the Overall Hospital Quality Star Rating eligibility criteria to require hospitals to report at least three measures in the Safety of Care measure group rather than the existing criteria of a hospital needing to report at least three measures in the Safety of Care measure group or the Mortality measure group. The current approach of requiring hospitals to report at least three measures in either Safety of Care or Mortality was vetted and partially informed by interested parties' feedback emphasizing the relative importance of Mortality and Safety of Care while still maintaining the Overall Hospital Quality Star Rating principle of optimizing inclusivity of measure information. This is meant to ensure that there is sufficient measure information available to allow for fair comparisons that reflect multiple dimensions of quality (particularly in the key domains of patient safety and preventing mortality), while still retaining flexibility to accommodate hospitals with varying measure reporting profiles.

We acknowledge commenters' suggestion to implement a performance flag or annotation to indicate poor Safety of Care performance rather than a 4-star cap or 1-star reduction. Currently, we are proceeding with the proposed methodology update to be consistent with the objective of the Overall Hospital Quality Star Rating to provide a single summary metric.

We appreciate commenters' recommendations to reconsider the weightings of the measure groups that contribute to the Overall Hospital Quality Star Rating, implement a customized weighting scheme, or separate out the HAI measures from the Safety of Care measure group. However, as noted in our v4.1 Methodology Report, the measure groups and respective weighting scheme were established during measure development with substantial interested parties, expert, and public input. The weighting of the Mortality, Safety of Care, Readmission, and Patient Experience measure groups will remain 22 percent and the weighting of the Timely & Effective Care measure group 12 percent.

While we acknowledge the suggestion to include the Inpatient Hospital Patient Safety structural measure, structural measures are currently excluded from the Overall Hospital Quality Star Rating as they cannot be easily combined with other measures that are captured on a continuous scale with more granular data.

We thank commenters for their suggestions related to transparency as it is a key guiding principle for maintaining the Overall Hospital Quality Star Rating. Interested parties' input was gathered at two Provider Leadership Workgroup meetings, two Person and Family Engagement Workgroup meetings and one Technical Expert Panel meeting between 2023 and 2024 in addition to the public comment period correlated with the Safety of Care Request for Information included in the CY 2025 OPPS Proposed Rule (89 FR 94514 through 94521). We will consider how to increase transparency by providing plain-language explanations of methodological changes for patients, families and advocates. Accompanying Overall Hospital Quality Star Rating methodology updates, we strive to continue upholding the principle of transparency by publicly posting the R pack and input file used for the Overall Hospital Quality Star Rating calculations. We encourage questions about the methodology to be submitted via the QualityNet Question and Answer Tool.

We received no comments on our proposed adjustments to paragraphs (b)(1), (e) and (f). We are finalizing our proposal without modification to reflect updates to the regulation text uses of Overall Hospital Quality Star Rating and Care Compare on Medicare.gov language.

We received no comment on our proposed removal of the reference to “as defined in Sec. 400.200 of this chapter.” We are finalizing as proposed.

After consideration of public comments, we are finalizing our proposal without modification to make the following two-stage methodologic updates to the Overall Hospital Quality Star Rating to emphasize the Safety of Care measure group (applicable to hospitals with at least three measures in the Safety of Care Measure Group): Stage 1: Implement a 4-star cap for hospitals in the lowest quartile of the Safety of Care measure group performance beginning in 2026 followed by Stage 2: Implement a blanket 1-star reduction for hospitals in the lowest quartile of Safety of Care measure group performance for the 2027 Overall Hospital Quality Star Ratings and later years.

Section 1001 of the Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by section 10101 of the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), amended Title XXVII of the Public Health Service Act (the PHS Act), in part, by adding a new section 2718(e). Section 2718 of the PHS Act, entitled “Bringing Down the Cost of Health Care Coverage,” requires each hospital operating within the United States for each year to establish and update, and make public a list of the hospital's standard charges for items and services provided by the hospital, including for diagnosis-related groups established under section 1886(d)(4) of the Act. Section 2718(b)(3) of the PHS Act requires the Secretary of the Department of Health and Human Services (“Secretary” or “HHS”) to issue regulations to enforce the provisions of section 2718 of the PHS Act, and, in so doing, the Secretary may provide for appropriate penalties.

In the final rule that appeared in the November 27, 2019 Federal Register (84 FR 65524) titled “Medicare and Medicaid Programs: CY 2020 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates: Price Transparency Requirements for Hospitals to Make Standard Charges Public” (hereafter referred to as the CY 2020 HPT final rule), we adopted requirements for hospitals to make public their standard charges in two ways: (1) as a comprehensive machine-readable file (MRF); and (2) in a consumer-friendly format. We codified these requirements at 45 CFR part 180. We also explained our belief that these two different methods of making hospital standard charges public are necessary to ensure that such data are available to consumers through data aggregation methods (for example, via integration into price transparency tools, electronic health records, and consumer apps), and direct availability to consumers searching for hospital- specific charge information. We stated our belief that innovators could use this information to create more useful data products for healthcare consumers to effectively compare prices. Moreover, we believe that employers (that offer or sponsor employee health plans), researchers, policy officials, and similar members of the public could utilize this data to promote competition and choice, ultimately helping to improve healthcare value.

Subsequently, in the CY 2022 OPPS/ASC final rule with comment period (86 FR 63941), we strengthened the hospital price transparency (HPT) enforcement process to improve compliance rates and made other updates to the requirements. Specifically, we: (1) increased the penalty amount for noncompliance through the use of a scaling factor based on hospital bed count; (2) deemed state forensic hospitals that meet certain requirements to be in compliance with the requirements of 45 CFR part 180; and (3) prohibited certain actions that we concluded were barriers to accessing the standard charge information, including prohibiting hospitals from designing their MRFs so as to make them inaccessible to automated searches and direct downloads.

In the CY 2024 OPPS/ASC final rule with comment period (88 FR 82079), we revised several HPT requirements to improve access to, and the usability of, hospital standard charge information; standardize the way hospital charges are presented; align, where feasible, certain HPT requirements and processes with requirements in the Transparency in Coverage (TiC) initiative; and strengthen and streamline our monitoring and enforcement capabilities. Specifically, we finalized: (1) a requirement that hospitals make a good faith effort to ensure standard charge information is true, accurate, and complete, and include a statement affirming this in the MRF; (2) new data elements that hospitals must include in the MRF, as well as a requirement that hospitals encode standard charge information in a CMS template layout; (3) a requirement that hospitals include a .txt file in the root folder that includes a direct link to the MRF and a link in the footer on its website that links directly to the publicly available web page that hosts the link to the MRF; and (4) improvements to our enforcement process by updating our methods to assess hospital compliance, requiring hospitals to acknowledge receipt of warning notices, and publicizing more information about CMS enforcement activities related to individual hospital compliance.

In these final rules, we stated that our policies requiring public release of hospital standard charge information are a necessary and important first step in ensuring transparency in prices of healthcare services for consumers. We also recognized that the release of hospital standard charge information is

not sufficient to achieve our ultimate price transparency goals. We noted that the regulations are, therefore, designed to address some of the barriers that limit price transparency, with a goal of requiring hospitals to make meaningful price information available to patients and employers to support a more competitive, innovative, affordable, and higher quality healthcare system.

On February 25, 2025, the White House issued Executive Order 14221, “Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information,” to empower patients with clear, accurate, and actionable healthcare pricing information.\443\ The Executive Order states, in part, that the Departments of the Treasury, Labor, and HHS (the Departments) shall take action to:

\443\ Exec. Order No 14,221 (2025). https://www.govinfo.gov/content/pkg/FR-2025-02-28/pdf/2025-03440.pdf.

Require disclosure of actual prices of items and services, not estimates;

Ensure pricing information is standardized and easily comparable across hospitals and health plans; and

Update their enforcement policies designed to ensure compliance with transparent reporting of complete, accurate, and meaningful data.

Executive Order 14221 directs HHS to take actions to continue to implement and enforce existing statutory requirements for hospitals to make public a list of standard charges in accordance with guidelines developed by the Secretary. Consistent with the Executive Order and to better attain the goals we have articulated in previous HPT rulemaking--requiring hospitals to make meaningful price information available to consumers, employers, policymakers, and others to support a more competitive, innovative, affordable, and higher quality healthcare system--in the CY 2026 OPPS/ASC proposed rule, CMS proposed several updates to the regulations at 45 CFR part 180.

In the CY 2020 HPT final rule at Sec. 180.20, we established a definition of “standard charge” as the regular rate established by the hospital for an item or service provided to a specific group of paying patients. In the CY 2026 OPPS/ASC proposed rule (90 FR 33790), we proposed subsequent updates to required MRF data elements that contextualize the standard charges, intended to improve the comparison of standard charge information and enable more meaningful disclosures to the public.

In the CY 2024 OPPS/ASC final rule with comment period (88 FR 82079), we established the requirement for each hospital, beginning April 1, 2024, to affirm in its MRF that the hospital has, to the best of its knowledge and belief, included all applicable standard charge information in accordance with the requirements of 45 CFR part 180 and that the information displayed is true, accurate, and complete as of the date indicated in the file. As described in the CY 2026 OPPS/ASC proposed rule, we proposed to strengthen this requirement, beginning January 1, 2026, by replacing it with an attestation in the MRF, and that attestation would also contain new specifications (compared to existing affirmation requirements). We stated in the CY 2026 OPPS/ASC proposed rule that these specifications would include that the hospital has: (1) included all applicable payer-specific negotiated charges in dollars that can be expressed as a dollar amount and for payer-specific negotiated charges that are not knowable in advance or cannot be expressed as a dollar amount, the hospital has provided in the MRF all necessary information available to the hospital for the public to be able to derive the dollar amount, including, but not limited to the specific fee schedule or components referenced in such percentage, algorithm, or formula, and (2) included the name of the hospital's chief executive officer, president, or senior official designated to oversee the encoding of true, accurate, and complete data.

In addition, pursuant to the authority provided to the Secretary under section 2718(b)(3) of the PHS Act to promulgate regulations to enforce section 2718 of the PHS Act, we previously have established regulations for enforcing the provisions of section 2718(e) of the PHS Act, including appropriate penalties. In the CY 2026 OPPS/ASC proposed rule, we proposed an additional change to encourage faster resolution of HPT civil monetary penalties (CMPs) and to reduce the amount of a CMP, under certain conditions, when the hospital waives its right to an administrative law judge (ALJ) hearing. 2. Summary of Final Policies

In this final rule with comment period, we are finalizing our proposals, with modifications, to revise the HPT regulations to enhance clarity and standardization in hospital disclosure of standard charges. Specifically, we are finalizing with modification our proposals to add to Sec. 180.20 definitions for “tenth (10th) percentile allowed amount,” “median allowed amount,” and “ninetieth (90th) percentile allowed amount,” which are values hospitals will encode when a payer- specific negotiated charge is based on a percentage or algorithm, to more accurately reflect the distribution of actual amounts that hospitals have received for an item or service. In tandem with that, we are finalizing revisions to Sec. 180.50 to remove the requirement for hospitals to disclose the estimated allowed amount, and, instead, require hospitals to disclose the 10th percentile, median, and 90th percentile allowed amounts, as well as the count of allowed amounts, in MRFs when payer-specific negotiated charges are based on percentages or algorithms. We are also finalizing, with modification, our proposal to require that hospitals use electronic data interchange (EDI) 835 electronic remittance advice (ERA) transaction data. Hospitals will be required to use EDI 835 ERA transaction data or an alternative, equivalent source of remittance data that includes the same information as EDI 835 ERA transaction data would include, to calculate and encode the allowed amounts. In addition, we are finalizing our proposals, with modifications, to require that hospitals comply with specific instructions regarding the methodology, including a lookback period, that must be used to calculate those amounts. We are finalizing that these policies are effective as of January 1, 2026, but we will delay enforcement of the requirements until April 1, 2026.

Additionally, we are finalizing, with modifications, our proposed amendments to Sec. 180.50 to require hospitals to attest that in the MRF, to the best of the hospital's knowledge and belief, the hospital has included all applicable standard charge information in accordance with the requirements of this section and the information encoded is true, accurate, and complete as of the date in the file. We also are finalizing our proposal that hospitals attest in the MRF that the hospital has included all applicable payer-specific negotiated charges as dollars that can be expressed as a dollar amount, and for payer- specific negotiated charges that are not knowable in advance or cannot be expressed as a dollar amount, the hospital has provided in the MRF all necessary information available to the hospital for the public to be able to derive a dollar amount, including, but not limited to, the specific fee schedule or components referenced in such percentage, algorithm, or formula. Furthermore, we are finalizing our proposal that hospitals encode in the MRF the name of the hospital chief executive officer, president, or senior

official designated to oversee the encoding of true, accurate, and complete data. In addition, to advance the comparability of HPT data with other healthcare data, we are finalizing our proposal to require that hospitals encode their organizational, or Type 2, National Provider Identifier(s) (NPIs) in the MRFs. We are finalizing an effective date of January 1, 2026, for the revisions at Sec. 180.50, including removal of the estimated allowed amount, disclosure of the 10th percentile, median, 90th percentile allowed amounts and the count of allowed amounts, the attestation requirements, and inclusion of NPIs. However, as discussed in more detail below, we will delay enforcement of these finalized revisions until April 1, 2026.

Finally, to encourage faster resolution and payment of CMPs, and in exchange for a hospital's admission of having violated HPT requirements, we are finalizing our proposal to update Sec. 180.90 to, under certain circumstances, reduce the amount of a CMP by 35 percent when a hospital waives its right to an ALJ hearing. We are finalizing at new Sec. 180.90(c)(4) that, effective beginning January 1, 2026, the amount of a CMP would be reduced by 35 percent should a hospital submit to CMS a written notice requesting to waive its right to a hearing under Sec. 180.100 within 30 calendar days of the date of the notice of imposition of the CMP.

Collectively, these changes aim to improve transparency in hospital pricing, facilitate efficient enforcement of the HPT requirements, and empower consumers with actionable pricing information.